Resumen
By using a reciprocal dumping model, this paper justifies the existing preferential
trade agreements as being a reaction to a third country export subsidy. On the
other hand, assuming that one of the member countries may set its production
subsidies optimally, the effects on welfare derived from the delegation of customs
union?s commercial policy are addressed. The main result obtained is that in a
non-transferable utility context the union is not sustainable.